Investor Access & Timelines

September 2025

One of the biggest concerns new investors have is: “How do I actually get into one of these deals, and what should I expect once I invest?”

This article will walk through who can participate, the syndication lifecycle, and what you as a Limited Partner (LP) can expect over the lifetime of your investment.

Who Can Invest in Syndications?

Syndications are regulated by the SEC under Regulation D exemptions. Most real estate deals fall under two specific rules: 506(b) and 506(c).

A Brief History: The JOBS Act of 2012

Prior to 2012, access to private syndications was highly limited. Sponsors could only accept accredited investors they already knew, and general solicitation (public advertising of deals) was prohibited.

That changed with the Jumpstart Our Business Startups (JOBS) Act of 2012, which introduced new exemptions under Regulation D:

• Rule 506(b): Allowed sponsors to continue raising capital from accredited investors and up to 35 sophisticated non-accredited investors, but without advertising.

• Rule 506(c): Created a new path, allowing sponsors to publicly market deals (through websites, podcasts, social media, etc.), but requiring that every investor be accredited with third-party verification.

This legislation unlocked syndication investing for a far wider audience. Opportunities once reserved for private equity firms or tight-knit networks became more visible and accessible to professionals and individuals building wealth outside Wall Street.

Rule 506(b): Relationship-Based Access

• Allows both accredited investors and up to 35 non-accredited (sophisticated) investors.

• Cannot be publicly advertised — investors must have a pre-existing, substantive relationship with the sponsor.

• This relationship means the sponsor has had the opportunity to learn about your goals, investing experience, and financial situation. It doesn’t have to be years in the making, but it must be more than signing up for a mailing list.

• Accredited investors can participate without limit, but sophisticated investors are capped at 35.

• The most common way to establish this relationship is through an introductory call with the sponsor.

If you’re reading this article and are curious about future opportunities, the best next step is to set up a short call with me. That conversation allows us to get to know each other, answer your questions, and — if it’s a fit — qualify you for 506(b) opportunities when they arise.

Rule 506(c): Publicly Marketed Opportunities

• Requires all investors to be accredited.

• Can be publicly advertised.

• Accreditation must be verified by a third party (CPA, attorney, or accredited verification service).

What Is an Accredited Investor?

To qualify as an accredited investor, you must meet at least one of the following criteria:

• Income Test:

  • Earned $200,000 or more in each of the last 2 years (single), OR

  • Earned $300,000 or more in each of the last 2 years (joint with spouse), AND

  • Have a reasonable expectation of earning the same this year.

• Net Worth Test:

  • Have a net worth of over $1,000,000 (alone or with a spouse), excluding the value of your primary residence.

(There are additional ways institutions or licensed professionals can qualify, but these are the main criteria for individual investors.)

What Is a Sophisticated Investor?

A sophisticated investor is someone who may not meet the income or net worth thresholds above, but who has sufficient knowledge and experience in financial and business matters to evaluate the risks and merits of a particular investment.

• The SEC doesn’t define this with hard numbers, but examples include:

  • Investors with prior experience in real estate, private businesses, or complex financial products.

  • Professionals with backgrounds in finance, accounting, law, or related fields.

  • Individuals who can demonstrate they understand the risks, liquidity constraints, and potential downsides of private placements.

• Under Rule 506(b), sponsors can accept up to 35 sophisticated investors — provided they can reasonably document that these investors are capable of evaluating the offering.

In practice, this means if you don’t yet qualify as accredited, you may still be able to participate in certain 506(b) opportunities — but only if you’ve established a relationship with the sponsor and demonstrated sufficient financial understanding.

Minimum Investments

Most syndications have minimums ranging from $50,000 to $100,000. This ensures a manageable investor group and meaningful capital commitments.

Some sponsors also allow additional investments in increments (e.g., $25K), but the standard starting point is around $50K.

The Syndication Lifecycle

Understanding the timeline helps you set expectations. While every deal is different, most follow a 5–7 year lifecycle:

1. Capital Raise & Closing (Months 0–3): Investors commit capital, sign subscription documents, and wire funds. Sponsor closes on the property.

2. Business Plan Execution (Years 1–3): Renovations, operational improvements, and stabilization occur. Distributions begin once cash flow stabilizes.

3. Ongoing Operations (Years 2–6): Investors receive steady cash flow, along with quarterly reports and annual K-1 tax documents. Sponsor manages the property and executes the plan.

4. Exit (Years 5–7+): The property is sold or refinanced. Investors receive their original capital back (return of capital) plus profits (return on capital).

What LPs Can Expect

• Before Investing: You’ll receive a Private Placement Memorandum (PPM), operating agreement, and business plan to review.

• At Commitment: You’ll sign a subscription agreement and wire funds.

• During the Hold: Expect quarterly financial reports, updates on occupancy and renovations, and regular cash distributions (monthly or quarterly).

• Annually: You’ll receive a K-1 tax form, reflecting your share of income, losses, and depreciation.

• At Exit: You’ll receive your original investment back plus your share of profits.

Key Questions to Ask About Timelines

• How long is the projected hold period, and why was that timeframe chosen?

• When do you expect distributions to begin, and what needs to happen first?

• Do you plan to refinance, get a supplemental loan, or sell as the exit strategy?

• How often will investors be updated?

• When are K-1s typically issued?

Why This Matters

When you understand how syndications work — who qualifies, the minimums, and what the timeline looks like — the process becomes less intimidating. You know what questions to ask, and you won’t be surprised by how long your capital will be committed. It's important for LPs to understand both the commitment required upfront and the projected timing of return on capital and return of capital.